Indications emerged that Nigeria and other oil producing countries may have glimmer of hope as oil price, yesterday, rose towards $56 a barrel, recovering from part of the previous session’s drop.

Though some traders and analysts believed that the prospect of oil price recording a further fall is not feasible, having sustained a near six-year low, the development yesterday showed that Brent crude LCOc1 rose $1.57 to $55.73 per barrel.

According to information, crude snapped a four-day winning streak, when the United States of American government said crude inventories increased by 6.3 million barrels, rising for a fourth consecutive week to hit a record high.

While the global market has more than enough crude, a collapse in Libyan production and a raid on an oilfield by gunmen, plus an attack on a tanker off Nigeria renewed concern about threats to supply.

ET, having fallen more than a dollar intra-day earlier, settled 5.5 percent lower on Wednesday. U.S. crude CLc1 added $1.20 to $49.65.

Oil analyst at Petromatrix, Mr. Olivier Jakob, said: “There’s more and more money coming in on the long and the short side, and I think the result of that will probably see increased volatility.

“If we start to have more problems in Nigeria, then it starts to reduce the spare capacity that there is and then it’s harder to make the case that oil should be at $30,” he stated.

Oil began to rise last week from near-six-year lows, in part due to a downturn in U.S. rig activity that could eventually dampen rapid growth in shale oil production, only to tumble on Wednesday.

As other oil traders said the recent increase in price was too soon to expect a sustained price rise, analyst at Commerzbank, Carsten Fritsch, said: “There’s no basis for a sustained recovery at the moment.”

A senior broker at Jefferies Bache, Mr. Christopher Bellew, who also disclosed that he did not expect prolonged gains, stated: “I think prices will consolidate around these sorts of levels before moving lower. It takes a lot of time for fewer rigs to translate into lower oil production.”

A workers’ strike in the United States at nine plants, including seven refineries accounting for 10 percent of the country’s refining capacity, added to concerns over crude demand.

The United Steelworkers union (USW) said a new contract offer was made by lead oil company negotiator Royal Dutch Shell Plc and that it would respond after considering the offer.

•Sourced from Newswatch Times.

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